Carrington Mortgage Services caters to first-time home buyers and borrowers who have less-than-perfect credit. The company chose to fill the void left by big banks that stepped away from Federal Housing Administration loans and other “riskier” products in recent years.
The mortgage company is one of four real estate-focused businesses that fall under the Carrington Holding Co. umbrella. Besides originating and servicing mortgages, Carrington offers real estate services, property management and capital management.
This alignment of the different businesses is what allows the company to offer so many mortgages that much of its competition doesn’t, says Ray Brousseau, president of Carrington Mortgage Services. “About 95% of our production is government — meaning it’s FHA, VA or USDA — and 5% is conventional,” he says.
Let’s see how Carrington Mortgage Services stacks up when it comes to mortgage lending.
AT A GLANCE
- Offers fixed- and adjustable-rate loans for both purchase and refinance, including FHA, VA, USDA, conventional and jumbo loans.
- Licensed in every state except Alaska, Hawaii, Massachusetts, New York, North Dakota, Ohio, Vermont, Washington.
- Minimum credit score: 550, or 500 in some cases.
Serving the underserved
About 45% of Carrington Mortgage Services’ new originations are for what Brousseau calls “the underserved borrower.” These borrowers usually have FICO scores of less than 650, and lenders view them as risky.
Brousseau says Carrington can offer more lenient borrowing requirements because it has in-house underwriters who can manually underwrite loans. The company has a lot of experience managing credit issues that come up with these kinds of loans.
“A few years ago, we raised our hand and said we want to be the lender that goes out and works with the underserved market,” Brousseau says. “It’s a huge market. There are nearly 97 million people in the country that fall into that heading of underserved. It’s almost one-third of the borrowing public.”
Carrington’s path into that market has had a few bumps. The U.S. Securities and Exchange Commission opened an investigation of Carrington’s asset management business in 2013 based on its purchase of mortgage servicing operations from subprime lender New Century Financial. No wrongdoing was found, but in 2015, Carrington Mortgage Services lost a foreclosure fraud lawsuit that also involved Wells Fargo.
Carrington mortgage products
Carrington Mortgage Services does offer jumbo and high-balance loans, but the majority it provides are low down payment, 30-year FHA loans for borrowers with a minimum 550 credit score, Brousseau says. Carrington has seen an increase in first-time home buyer business since incorporating this “underserved” strategy a few years ago, he says.
The company focuses much of its lending efforts on veterans and family members of active-duty military members. Brousseau says that each month it issues roughly 70% FHA loans, 20% Veterans Affairs loans, 3% or 4% U.S. Department of Agriculture loans and 6% conventional loans.
It offers two FHA loan variations that allow borrowers to buy or refinance a home and provide money for home improvement projects. The FHA 203k Streamline option allows borrowers up to $35,000 for home improvements. The FHA 203k Full funds major repairs or a full home rehabilitation. Repairs or renovations must cost at least $5,000 on both loans.
Carrington’s mortgage process
To start the mortgage process at Carrington, you can call, submit a form online, or visit one of its branches in the following states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Kentucky, Michigan, Missouri, Nevada, Ohio, South Carolina, Texas and Virginia. Whichever you choose, a loan officer will help you complete the application. To submit and receive documents online or check your application status, create an account on Carrington’s website.
If you need more home-buying help, a Carrington representative can pair you up with a real estate agent or someone from Carrington’s other businesses.
If your credit score isn’t perfect, Carrington will consider other factors when underwriting your loan. Your mortgage payment history, job history and stability, gross income or ability to make a larger down payment can all help you get approved.
Carrington Mortgage Services charges an underwriting fee of between $400 and $900, and the process typically takes three to four weeks from application to funding, Brousseau says. The specifics can depend on the type of loan you’re getting and your state.
Carrington’s My Loan Detail
Carrington requires all borrowers to take an online credit and financial education program called My Loan Detail shortly before their loan closes. This gives the company more confidence in borrowers’ ability to repay loans.
The program asks borrowers questions about their loans to make sure they understand the terms and the conditions. Some of the questions are about loan fees, what happens if borrowers don’t make payments, and the definitions of a loan officer, processor and broker, Brousseau says.
He says the program comes late in the process because the down payment amount and appraisal fees often change, which can alter the loan terms.
Down payment assistance programs
Carrington partners with housing authorities in 13 states to offer down payment assistance programs. Eligibility varies by city and county.
These programs aren’t available nationwide because participation in some states requires Carrington to sell the servicing rights to the associated loans, Brousseau says. “Keeping that servicing coupled to the origination is important to us when we can,” he says, because it helps make sure the company can work with borrowers who are struggling to remain in their homes.
What Carrington Mortgage Services does best
- Has an easy to navigate website with clear information and ample educational material.
- Offers down payment assistance programs through state housing authorities.
- Focuses on borrowers with lower credit scores.
Where Carrington Mortgage Services falls short
- Doesn’t offer down payment assistance programs in every state.
- Doesn’t have branch locations in every state.
- Was recently involved in a foreclosure fraud lawsuit.
NerdWallet’s star ratings for mortgage lenders are awarded based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.